The capacity to spend development funds in the energy sector

Meeting the goal of universal access to modern energy services by 2030 will require dramatically increasing, as well as re-orienting, the current flows of energy investments in developing countries. While the mobilization of such capital is consistently presented as a major challenge, other issues such as the predictability and volatility of financing flows and absorption capacity will also play a crucial role. This paper examines the issues of predictability and absorption of development finance in the context of the U.N. Sustainable Energy for All initiative, by presenting analysis of the critical points that could limit the effectiveness of committed and future funds. In doing so, we also present analysis of the predictability of the financial assistance for the energy sector and how it relates to the funding in other sectors. We observe that the energy sector is characterized by lower than average disbursement rates, with considerable variability between countries, and is well correlated with government effectiveness figures and the disbursements rates of other sectors.